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Investing.com - CFRA has raised its price target on NetEase.com (NASDAQ:NTES) to $148 from $145 while maintaining a Hold rating, citing foreign exchange movements as the primary reason for the adjustment. The new target represents about 9% upside from the current price of $135.91, with the stock having delivered impressive returns of over 55% in the past year.
The research firm’s updated target price represents a multiple of 18.1x its 2026 earnings per ADS forecast, compared to the five-year mean of 17.5x. CFRA justifies this premium valuation based on NetEase’s consistent earnings delivery, strong net cash position, and growing monetization across both new and legacy gaming titles. InvestingPro data confirms this financial strength, showing NetEase holds more cash than debt on its balance sheet and is currently trading at a P/E ratio of 20.6, which is actually low relative to its near-term earnings growth potential.
CFRA forecasts NetEase’s revenue to grow 8% in 2025 and 7% in 2026, driven by its Games and Value-Added Services segments. The firm expects growth to be supported by full-year contributions from successful titles such as Marvel Rivals, Where Winds Meet, and Fantasy Westward Journey, alongside new launches including FragPunk and Dunk City Dynasty. This projection aligns with NetEase’s historical performance, as the company has maintained a 12% revenue CAGR over the past five years and achieved 5.81% revenue growth in the last twelve months.
The research firm also anticipates progressive growth in NetEase’s operating margin. While licensing fees from global titles will pressure gross margins, CFRA believes this impact will be offset by reduced marketing intensity and improved R&D efficiency.
CFRA has increased its 2025 earnings per ADS forecast for NetEase to CNY53.72 from CNY53.00, while maintaining its 2026 forecast at CNY58.00.
In other recent news, NetEase reported third-quarter earnings that surpassed analyst estimates, although its revenue of RMB28.4 billion ($4.0 billion) fell short of expectations. Despite an 8.2% year-over-year growth in revenue, the figure did not meet the consensus estimate of RMB29.01 billion. Benchmark and Jefferies both raised their price targets for NetEase to $158, maintaining a Buy rating. Benchmark highlighted the company’s solid deferred revenue growth, which suggests steady momentum in its gaming business. Jefferies noted that NetEase’s contract liabilities showed strong momentum, attributing this to the company’s focus on successful game titles and content upgrades. These developments indicate that analysts remain optimistic about NetEase’s future performance despite the revenue miss.
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